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You may be searching for minority business loans because you have an idea for a great new business.
Or perhaps your existing small business could grow with a little cash influx…
As we know, it’s very difficult to start or expand your business without access to money.
The problem is that minority business owners still struggle to get approved for a loan–
Even now in 2017!
Anyone familiar with the research will agree that investing in diverse companies is good business sense.
Yet a recent report published by the Small Business Administration found that female and minority business owners (specifically African-American and Hispanic) are still less likely to get approved for loans.
As a result, women and minority owned businesses are forced to operate with less capital across the board compared to their counterparts–
A testament to the tenacity of minority entrepreneurs as much as to the flaws of the current lending climate.
According to a study, 8 million minority-owned businesses provided 7.2 million jobs and $1.38 trillion in revenue in 2012.
The good news is, despite an imbalance in access to capital across ethnicities and genders, there are minority business loans and resources to help bridge the gap.
Learn more about Small Business Loans for Women
All businesses need capital grow, and your small business is no exception!
While there is no specific type of minority business loan, there are certain financing options and even special interest programs that may suit your business better than others.
If you’re looking for business loans or minority business grants, we want to make it as easy as possible for you to take the next step towards your new venture.
To increase your chances of securing funding, you have to do the research and determine exactly what lenders are looking for.
The more detailed you can be, the better your chances of getting a good rate on a business loan.
Whether you’re looking for a small business loan for minority women, Hispanics, or Asians, or perhaps business loans for African-Americans, knowing the ins and outs of different financial products and the underwriting criteria used by lenders is a set of life skills that you should not go without.
Easier said than done, right?
That’s why we prepared this guide to help you understand where to begin searching for minority business loans, what affects your eligibility, and the full scope of your financing options.
If you have decent personal credit and are just starting out, business credit cards, equipment financing, and personal loans can provide the funding you need.
Learn more about Start Up Loans
If you need a larger sum of money, the Community Advantage Loan program is worth considering.
This program offers SBA 7(a) loans of up to $250,000 through mission-based organizations that support small businesses in underserved markets.
Perhaps even more appropriate for minority business owners is the SBA 8(a) Business Development program, which assists economically disadvantages entrepreneurs compete in the marketplace.
The SBA guarantees several loans for a variety of reasons, including nonprofit microloans.
Learn more about SBA Loans
If you need access to less than $50,000 to startup or expand, the SBA microloan program is one to check out.
The average microloan is $13,000, and you can obtain one through a multitude of nonprofit community organizations.
Minority business owners with bad credit may not qualify for some of the options above.
With that being said, online alternative lenders (non-bank lenders) often have less complicated loan application processes than traditional ones and may approve borrowers with less-than-perfect credit.
Learn more about Alternative Lending
Even as minority business loans continue to prove elusive, there are still a number of grants available to support underserved minority businesses as much as possible.
You’ll find these special grants frequently have qualifying criteria specific to race, values, sexual orientation, industry, or organizational goals, for example.
Even so, a grant may be easier to obtain than a minority business loan if you fit the grant description.
Here’s a list of resources and funding options that provide assistance to women and minority owned businesses:
37 Angels is a female-founded firm that only funds businesses with proof of concept.
Venture capital investments are not exclusive to any demographic, however they do seem to show preference for women and minority-owned businesses.
Another early-stage angel fund, Belle Capital focuses on companies in underserved capital markets across the U.S.
The Business Center for New Americans is an issuer of micro loans ($5,000 – $50,000) for minority business owners who can’t qualify for traditional loans due to poor credit or lack of business history.
You can get help for your minority owned business through the Small Business Administration in a couple different ways.
The SBA 8(a) Business Development Program helps entrepreneurs win lucrative government contracts and long-term growth.
Participation in the program is dependent on strict eligibility criteria and divided into two phases over nine years.
This program provides minority grant funds for nonprofits, institutions, organizations, native tribes, faith-based organizations, and other agencies that seek to improve the health of minorities.
Mentioned earlier, the SBA’s Community Advantage Loan program does not provide minority business loans exclusively.
However, this program is designed to help small business owners in underserved markets who have struggled to qualify for traditional loans.
If you run a business that provides broadband internet, the Community Connect Grant offers money to help you operate in rural areas where major private broadband providers aren’t yet delivering service.
The Dare To Dream Grant is actually a multi-stage program for college entrepreneurs.
It includes business seminars and up to $10,000 in startup funding.
The EMDP gives recognized tribes and Indian allottees funds to evaluate their lands for minerals and energy sources that can be sold to investors or developed into their own energy sources.
EAP centers provide education and support to minority business owners in New York who need help creating marketing plans, applying for loans, and more.
EPA awards over $4 billion in grants annually to help visionary organizations achieve their environmental goals.
The FedEx Small Business Grant Contest is one of the best deals on this list if you have a strong digital presence.
With three prize packages totaling nearly $50,000, you won’t be needing a minority business loan if you can win this.
The First Nations Development Institute Grant offers grants to nonprofits that serve Native Americans, Alaska Natives, and Native Hawaiians.
These grants for minorities are meant to help develop projects and businesses that can strengthen each community.
For entrepreneurs with a compelling idea, the Miller Lite Tap the Future contest (previously the MillerCoors Urban Entrepreneurs Series) is held annually.
Contestants get to pitch Daymond John of Shark Tank, and winning pitches get $20,000 plus the chance to move forward to the $200,000 grand prize round.
The Minority and Women Revolving Loan Trust Fund Program is making low-cost financial assistance available to minority and women-owned businesses that are unable to access traditional financial services.
Operated by Empire State Development, it has capitalized loans of more than $3.5 Million for 13 community-based economic development organizations located throughout New York.
Union Bank facilitates a Business Diversity Lending Program for minorities.
Minority business loans and credit lines of up to $50,000 are made available to underserved demographics through this program.
The Minority Business Development Agency (MBDA) doesn’t give grants to businesses, but it does provide consulting, networking opportunities, and loan counseling for minority business owners.
A nationally recognized non-profit, the Minority Chamber of Commerce helps minority business owners improve financial literacy, promotes networking, and may connect members with preferred vendors.
The Valley Economic Development Center (VEDC) facilitates the National African-American Small Business Loan Fund in partnership with JPMorgan Chase & Co.
The program provides loans for minority businesses in low-income communities of Los Angeles, Chicago, and New York. Average loans range from $35,000 to $250,000.
The National Association for the Self-Employed, a nonprofit, offers grants to members which demonstrate the value of their small business.
There are no minority business loans here, but who needs a loan when you can get a grant?
The NMSDC runs the Business Consortium Fund Direct Loan Program which gives term loans and lines of credit to qualifying minorities. Applicants can borrow $75,000 to $500,000.
The Open Meadows Foundation offers business grants to organizations which benefit women and justice for minority groups.
Application guidelines are somewhat strict, but they offer three special funds in addition to their general fund, including:
Operation HOPE is an organization that offers loans, resources, and business related courses to members of low-income communities.
Phenomenelle Angels only invests in women and minority-owned businesses in the Midwest.
Plum Alley specializes in aligning diverse teams with investors that support the same values.
The POWER Initiative is a program that helps communities impacted by a declining coal mining industry.
Grant money awarded can be used to diversify workforce opportunities for those who’ve lost coal mining related jobs.
While not exclusive to minority entrepreneurs, Rollover for Business Startups or ROBS is a funding strategy where you tap into your investment savings without penalties.
You do this in four steps:
Definitely speak with your accountant and financial planner before using this strategy.
The Rural Business Development Grants program offers grant money to encourage growth in rural areas.
Grants range from $10,000 to $500,000 and are for emerging businesses with fewer than 50 employees and less than $1 million in gross revenue.
The Service Corps of Retired Executives is a nonprofit truly dedicated to small business; it’s even supported by the SBA.
SCORE doesn’t offer minority business loans directly, but their business mentoring program, free workshops, and other valuable services are worth a second look.
Is your business idea built around biotechnology?
If yes, then forget about minority business loans, because the NIH SBIR program only funds early-stage small businesses seeking to commercialize innovative biomedical technologies.
Quite similar, the main difference with the NIH STTR program is that it requires formal collaboration with a research institution in Phase I and Phase II.
Learn more about the NIH SBIR and STTR programs, including their critical differences.
The Startup Runway Foundation is awarding $10,000 to high-velocity tech startups from minority and women founders headquartered in the Southeast.
The prize money is equity-free, which means that the winner of the funding retains full ownership of the business.
The Tribal Energy Development Capacity grant gives funding to business owners who want to start or expand businesses that develop energy resources on Indian land.
If you treat drinking water or collect solid waste, the Water & Waste Disposal Loan & Grant Program offers funding for construction and acquisition of your operation.
Facilitated by the SBA, the Women Veteran Entrepreneurship Program Grant helps female veterans launch or grow a business.
It’s unfortunate that race and ethnicity still play a role in getting access to capital, especially since our economy benefits so much from minority-owned businesses.
If you’re a minority who’s running a small business, know this:
We appreciate you!
Thankfully, there are federal agencies, alternative lenders, and nonprofit organizations that recognize the value of your contributions.
So go ahead and bookmark this page–
We’ll keep this list of minority business loans and resources up to date, so you always have plenty of options when you need capital.